APR vs APY Calculator
Convert between APR and APY.
Input
Result
What is a APR vs APY Calculator?
The APR vs APY Calculator helps you convert between APR and APY and understand how compounding frequency affects your returns. Just enter your numbers and the tool does the rest — no manual math, no guesswork.
How to calculate APR vs APY manually (the formula)
The specific formula depends on what you are calculating. The calculator applies the correct equation automatically, but understanding the formula helps you verify the results and adapt them to your own needs.
Example calculation
Enter your values into the calculator and it will produce an instant result. For a step-by-step walkthrough, try different inputs and observe how each one affects the outcome.
Common mistakes
- Using APR when you need APY for investments — A savings account advertising 5% APR actually earns more due to compounding. Always use APY to compare earnings.
- Forgetting to convert percentage to decimal — Divide by 100 before plugging into the formula. 5% becomes 0.05.
- Confusing compounding periods — Enter the number of times interest compounds per year. Monthly = 12, daily = 365, quarterly = 4.
Frequently asked questions
What is the difference between APR and APY?
APR (Annual Percentage Rate) is simple interest without compounding. APY (Annual Percentage Yield) includes the effect of compounding within the year.
How do I convert APR to APY?
APY = (1 + APR/n)^n − 1, where n is the number of compounding periods per year. Monthly compounding: APY = (1 + APR/12)^12 − 1.
Why is APY higher than APR?
APY reflects compound interest. With monthly compounding, interest earns interest each month, so the effective annual rate exceeds the nominal rate.
How does compounding frequency affect APY?
More frequent compounding = higher APY. Daily compounding gives a slightly higher APY than monthly at the same APR.
Should I compare APR or APY?
Use APY for savings and investments (to see what you actually earn). Use APR for loans (to see what you actually pay).
When would APR and APY be the same?
APR equals APY only when there is no compounding (n = 1), such as with a simple-interest loan where interest is paid annually.